If You are Asking the Salary Question — Beware.

“What were you paid at your last job?” This is a question frequently asked by recruiters and hiring managers. The response is supposed to give the employer a clue as to whether or not a candidate will be satisfied with the pay in the open position. But this question is stirring debate among HR professionals and legislators. Some believe it can stifle diversity in your workforce, encourage pay inequity, and lead to a perpetuation of past discrimination.

If you are asking candidates about their salary history, either on job applications, during an interview, or when negotiating, be careful. A few states and municipalities have actually made it illegal to ask. You should review your state or local laws before assuming it is okay to ask.

Fifty years ago, in an effort to abolish wage discrimination based on gender, President John Kennedy signed the Equal Pay Act. All workers are covered by this Act which regulates the conduct of state, local, and federal governments and most private employers. The law was passed to help rectify the wage inconsistencies that were being experienced by women in the work place. The law is almost always applied to situations involving women who are paid less than men for doing the same jobs.

Oregon, Massachusetts, Delaware and California have become the latest states to address pay equity by prohibiting employers from asking job applicants how much they earned in previous jobs. Laws that prohibit asking about salary history in these states either took effect in 2017 or will take effect in 2018. New York State has banned such questions in the screening process for employees in state agencies and the legislature is considering a ban for private employers in that state as well.

New York City, New Orleans, Pittsburgh, and San Francisco have all passed similar laws prohibiting employer questions about salary history.

If you operate in any of the states or municipalities noted, you should remove any questions about salary history from your job applications and instruct your hiring managers, or the responsible interviewers, not to ask applicants about salary history.

No matter where you operate, here are suggestions for the best way to establish pay for any one particular job:

First consider evaluating the position itself. What is the job worth to the company? Don’t think about any one person. Just concentrate on the job and what it is worth to your organization. Then do some research to learn what other employees in similar jobs are getting paid. Be sure to look at similar industries and consider location when researching.

This process will be a lot easier if you have an accurate job description prepared for the open position. As we have mentioned in previous blog articles, no matter how big or how small your business is, written job descriptions are an essential piece to any organization.

Here are some things you may want to consider before setting a pay grade for your job title:

Does your organization have a pay philosophy when it comes to salary?

What is the set budget for the job?

Is there a need for a degree, certifications, license or extensive experience that could cause the salary to increase?

Consider a salary range. This will give you room to hire experienced candidates that are entry level as well as candidates that are expert level.

Consider the results of the salary market analysis. Is there a demand for the job? This may cause the salary to escalate. Is the job market saturated with the skill set? This may cause a lesser salary.

What is the cost of living in your area? What is standard for your industry? Some areas and industries are simply known as being higher-paying and that typically affects overall pay scales.

If you are an employer with questions, please contact our HR team by calling 724-864-8745.

Disclaimer:The information provided on this web site is for informational purposes only and not for the purpose of providing legal advice. Use of and access to this web site does not create an attorney-client relationship between East Coast Risk Management or our employment attorney and the user or browser.